FHA vs. Conventional Loan Calculator

Enter your credit score, purchase price, and down payment — compare FHA vs. conventional monthly payments, mortgage insurance cost, and 5-year total cost.

How FHA and Conventional Loans Differ

  • FHA loans are government-backed and require a 1.75% upfront mortgage insurance premium (rolled into the loan) plus an annual MIP of 0.55% for most borrowers. If your down payment is less than 10%, FHA MIP lasts the life of the loan.
  • Conventional loans use private mortgage insurance (PMI) when LTV exceeds 80%. PMI rates vary by credit score and LTV but cancel automatically when your balance reaches 78% of the original purchase price.
  • FHA loans accept lower credit scores (580 minimum for 3.5% down) but cost more in mortgage insurance over time. Conventional loans reward higher credit scores with lower PMI rates and no permanent insurance obligation.

Calculation details

Methodology

Both scenarios use fixed-rate amortization. The conventional estimate applies a simplified PMI rate based on LTV and credit band and models PMI until the balance reaches 80% of the original price. The FHA estimate adds a modeled 1.75% upfront mortgage-insurance premium to the loan and applies a modeled annual MIP rate.

Assumptions and limitations

  • PMI pricing is a simplified estimate and does not include every insurer, occupancy, property, or loan factor.
  • FHA mortgage-insurance rates and duration use common planning assumptions rather than determining case-specific policy.
  • Loan limits, credit eligibility, automated underwriting, reserves, and lender overlays are not evaluated.
  • Taxes, homeowners insurance, closing costs, points, and prepaid items are excluded from the comparison.
  • Rates are user assumptions and may differ between actual FHA and conventional offers.

Worked example: 5% down

  • $350,000 purchase and $17,500 down
  • 700 credit-score band
  • Conventional at 6.75%
  • FHA at 6.25%
  • 30-year term

Conventional models a $332,500 loan, about $2,157 P&I, and about $291 PMI. FHA models a $338,319 financed balance after upfront MIP, about $2,083 P&I, and about $155 monthly MIP.

The lower modeled FHA rate and insurance do not determine the better loan. Compare eligibility, disclosures, cash to close, insurance duration, and actual lender pricing.

Official sources

Frequently Asked Questions

What is the difference between FHA and conventional loans?

FHA loans are insured by the federal government and designed for buyers with lower credit scores or smaller down payments. They require a minimum 3.5% down with a 580+ credit score. Conventional loans follow Fannie Mae/Freddie Mac guidelines, require 620+ credit, and allow as little as 3% down for eligible buyers. FHA MIP often costs more over time than conventional PMI, especially since FHA MIP can be permanent.

Which is better, FHA or conventional?

FHA is usually better with credit scores below 680 or when you have limited down payment. Conventional is usually better with 720+ credit score or 10%+ down payment. The biggest long-term factor: FHA MIP is permanent (for <10% down) while conventional PMI cancels at 80% LTV. On a $350,000 loan, this difference can total $15,000–$25,000 over 10 years.

Can I switch from an FHA to a conventional loan?

Yes — you can refinance from FHA to conventional once you have enough equity and your credit qualifies. This is the primary strategy to eliminate permanent FHA MIP. Once your home reaches 20% equity (through payments, appreciation, or both), refinancing to conventional removes the MIP obligation. Factor in closing costs (2%–5% of the loan) to determine if the savings justify the refi.

What credit score do I need for an FHA loan?

The FHA minimum is 580 for a 3.5% down payment, or 500 for a 10% down payment. However, individual lenders often set higher minimums — many FHA lenders require 620+. If your score is below 580, you'll need to find a lender willing to work with lower scores or build your credit before applying.

How to use this estimate

This calculator is an educational planning tool. Results are based on the figures and assumptions entered by the reader, use standard mortgage mathematics, and are not a loan offer, approval, or substitute for a lender's Loan Estimate. Taxes, insurance, fees, mortgage insurance, and available rates vary by borrower, property, lender, and location.

Review the assumptions, compare more than one scenario, and confirm the final numbers with a licensed mortgage professional before making a financial commitment.